“We understand that our new bonus system will not suit everyone, but a return to the previous system is impossible,” ran the announcement of Glovo, a leading delivery service app, in Kyiv.
Since July, food delivery riders in the Ukrainian capital have faced a sizeable pay cut. Under Glovo’s old system of bonuses, a driver could receive a 2,200 hryvnya bonus (€76) after completing 40 deliveries in a week. But the new system set the 40 delivery bonus at 1,480 hryvnya, and drivers who aren’t ready to work under these new conditions have been asked to leave the service. This news about worsening working conditions shocked riders, prompting the first public protest by platform workers in Ukraine.
Research by the International Labour Organization shows that Ukraine ranks first in Europe in terms of how quickly people are taking up employment through digital platforms. As a rule, prominent companies in Ukraine use civil contracts - which give no protection, and only promise payment for completed work - instead of employment contracts. But Glovo’s business model stands out: in Ukraine, they don’t even sign civil contracts, which are legally required. Roughly 5,000 couriers in Ukraine are working without any form of agreement with the company. These riders have not registered themselves as individual entrepreneurs (as have, for example, Ukrainian Uber drivers).
Ukraine’s gig economy has been “infected” by local diseases, combining precarious employment with the worst forms of illegal work. But recent victories in Spain - and signs of change in Ukraine - give us a glimpse of what a resolution could look like.
Terms and conditions. What’s inside?
Glovo currently holds a leading position in Ukraine’s food delivery market. Roughly 500,000 people have downloaded the company’s mobile app, and since December 2018, the share capital of Glovo’s Ukrainian branch has increased tenfold. This month, the company opened its eighth office in the country.
Relations between Glovo and its couriers are regulated by different internal rules. Risks and principal expenses are shifted onto riders, who are called “prudent businesspersons” or “freelancers”. According to a set of “Special Terms and Conditions” (which riders have to accept), Glovo asks couriers to take out insurance and pay taxes. But in Ukraine, a former Glovo courier tells me, most couriers work without fulfilling these obligations. Couriers do not pay welfare contributions on their earnings, and so they can’t be recognised as employed or self-employed persons. In turn, this means they don’t have the right to any compensation from the state in case of injury. For example, in late July this year, a 20-year-old rider died following a road accident in Kharkiv. His family did not receive compensation.
Instead, Glovo states that it provides information services, acting as a “meeting point” between a buyer and a courier. Yet Glovo, as owner of the platform, sets requirements to be followed at work (hot and cold food should be transported in different containers, a courier should wear a denim or leather jacket in the rain etc).
The food delivery service states that it is not an employer - yet, according to the “Special Terms and Conditions”, it can fire a rider for making “negative’’ comments on Facebook. After Glovo drivers held protests in Kyiv last month, several participants later found that they had been banned from the Glovo app - without being told why. Despite the company’s assertion that digital platform acts automatically, it is fully dependent on managers who make decisions at their own discretion.
Glovo is almost the only Western tech company operating in Ukraine which has united workers against it
There are other aspects of the relationship between Glovo and its couriers that suggest they are “employment relations” according to Ukraine’s Labour Code:
- As part of driver registration, drivers have to submit a medical record certifying the completion of a physical examination
- Glovo can give instructions to new riders about traffic rules, which is comparable to safety training
- Company provides branded clothing and delivery bags to the courier
- Internal working regulations: Glovo identifies important business factors for independent contractors; prohibition of alcohol and drug use before or during “working hours”; maximum delivery time is set (60 minutes)
Generally speaking, the more control a platform exerts over workers, the more likely it is to be considered an employer.
Why is the Ukrainian situation is unique?
Glovo, a multinational firm, imposes the same model of relations with its riders in every state. But in Ukraine this behaviour looks even more abusive. Ukraine has the lowest minimum salary in Europe, yet Glovo still tries to cut rider bonuses. And employees are not protected in cases where the company attempts to pressure them. The latter can be explained by the following factors.
- Ukraine’s Labour Inspection, including its inspectors, have limited powers, as noted in a 2018 EU-ILO report. The State Labour Service does not have adequate human or financial resources. In May 2019, Ukrainian employers challenged regulation on labour inspections in court, and now the Labour Service is not permitted to conduct unplanned workplace inspections.
- Ukrainian trade unions are, on the whole, very weak. In 2018, the State Statistics Service of Ukraine did not record any strikes. Of course, Ukraine did witness several protests and “wildcat” strikes, but no legal strikes. There is no experience of organising workers in Ukraine’s “new economy” of apps and platform workers. Young people are not involved in trade unions, and there are no regulations on determining the status of trade unions that incorporate non-typical employment scenarios, such as on-demand workers.
- Ukrainian laws do not stipulate what factors constitute an employment relationship. Earlier this year, the Ministry of Social Policy attempted to change labour legislation, but failed. (Neoliberal experts and institutions stated that mechanisms to tackle undeclared work will compromise Ukraine’s IT sector.) This means it is not easy to fight against false self-employment by bringing a claim to court. ILO sets a simple rule: whenever there is a juridical subordination between a work provider and who benefits from it, these relations should be considered official employment
Indeed, the focus on the person who benefits from work is important in terms of the ILO’s practice when it comes to detecting hidden employment. Privately, representatives of Ukraine’s State Labour Service say that it is difficult to identify the beneficiary in the Glovo case: a courier in Kyiv interacts with offices in both Ukraine and Spain. For example, couriers working in Kyiv receive payment from Spain.
Demands of on-demand workers
Glovo stands out for one more reason. It is almost the only Western tech company operating in Ukraine which has united workers against it. Since 22 July, Glovo couriers have organised three protests in Kyiv in response to the new bonus structure. Their demands include bonus system thats allow drivers to earn decent wages without working extreme overtime, insurance policies for couriers in case of accidents, an “amnesty” for drivers involved in protests, compensation of drivers’ expenses on fuel, food and time spent waiting for orders.
So far, all attempts to negotiate with the company have been unsuccessful. Each new protest has resulted in more couriers being banned from the Glovo app. In response, couriers have decided to set up a trade union of delivery services workers. (Disclaimer: the Social Movement NGO, of which I am a member, helped in this regard.) Of course this union has no specific rights in Ukrainian law. Their first task is to prove that their relationship with Glovo should be considered officially as employment.
Footage of Glovo rider protest in Kyiv, Ukraine. Source: Political Critique Ukraine
A rider can thus bring an action to the court. If the court establishes that the relationship should equal employment, the couriers will have the right to receive a salary for the entire period of employment. After that, a labour inspector can fine the company €4,430 for non-registration of labour relations. In turn, a further fine could be imposed (for each unregistered worker) after the inspection.
One eye on Spain
Precarious delivery riders and labour inspectors in Ukraine are looking at the experience of fighting Glovo elsewhere for inspiration.
In July 2018, the Spanish Labour Inspectorate recognised 326 Glovo couriers working in Zaragoza as official employees of the company. Glovo was forced to pay €379,963 as part of the decision, which includes welfare contributions for the eight months in which the labour investigation ran. During the investigation, inspectors questioned roughly 180 Glovo drivers (including ex-couriers) and representatives of the city’s restaurants. Several hundred drivers were registered in Social Security system as a result.
In Ukraine, labour inspectors can fine employers only after “catching” illegal workers on the premises. On 21 August, the Ukrainian government adopted new regulations on inspection visits. Representatives of State Labour Service believe that these legislative changes will establish a flexible framework for revealing hidden employment.
Ukrainians believed that multinational businesses could bring higher levels of social standards to workplaces. Glovo has helped to dispel these illusions
If the Ukrainian labour inspection renews its activity, the main question will touch on how to categorise the relationship between Glovo and its riders.
Prior to 2019, Spanish courts had no consolidated position concerning Glovo’s business model. In some regions, Spanish courts identified couriers as not being truly self-employed and found that they had been dismissed unlawfully, but in others – they didn’t. “Maybe one day the [Spanish] Supreme Court will decide, setting a precedent,” reflected one Spanish outlet.
In July 2019, the Spanish Supreme Court identified a Glovo courier as an employee of the company. The Court’s argument ran that without the Glovo platform, a person simply would not be able to deliver food, so the Glovo application is actually a means of production. Conversely, without couriers, the company would not be able to deliver the food. Couriers have no right to change the terms of the contractual relationship with the company, which indicates the asymmetry of power. Glovo actually acts as an employer, as it has a deciding influence on the provision of offline services and determines their maximum cost. The company indirectly controls the execution of work – through the Glovo app and location tracking. Finally, the grounds for termination of the relationship are similar to disciplinary grounds for dismissal (improper performance of duties, delays).
Notably, the Spanish Supreme Court cited European Parliament Directive 2019/1152 and of the European Council in June 2019 on transparent and predictable working conditions in the European Union. These documents proclaim a minimum set of rights for those employed in the “sharing economy”. Glovo experts have doubted whether the Directive could be applied to Glovo workers, because they can be classified as self-employed.
Alongside other platforms, Glovo has created a challenge not only in Ukraine, but also in the European Union.
Previous EU directives on atypical forms of work used the concept of “equal working conditions with comparable workers”. For example, fixed-term workers or part-time workers received the right to demand a minimum set of guarantees, established for “standard” employees who work in a similar situation. But this doesn’t fit into situations where employer uses atypical workers exclusively. Yet the economic essence of these models isn’t new, they are similar to those which were used under early capitalism. “Breaking up jobs into small, low-skilled tasks is simply old wine in new bottles,” proclaims researcher Kurt Vandaele in his study of platform work.
Will Glovo change how it treats Spanish couriers after the Supreme Court ruling? “If that were the case, the solution would be to grow in other countries so that Spain would represent a smaller percentage of our business,” this is what Oscar Pierre, CEO and founder of Glovo, said in 2018. The Spanish Supreme Court can’t force Glovo to change their practice everywhere it works, including Ukraine. But showing these examples of harmful practice is important: multinational startups are sensitive to public opinion. Partners of Glovo such as McDonald’s should consider how ethical it is to work with companies that fail to comply with minimum working standards.
Meanwhile, riders’ actions speak for themselves: couriers in Ukraine are saying that working conditions at a new delivery service, Menu Group, are better than Glovo, such as riders receiving accident insurance from the company. With the Ukrainian state constrained by the standard neoliberal agenda, it’s an interesting thought: could market forces help to deliver justice in Ukraine’s delivery sector? Perhaps, but at least so far - only in response to pressure from young workers.
Ukrainians believed that multinational businesses could bring higher levels of social standards to workplaces. Glovo has helped to dispel these illusions. Could they go back and try to build a civilised social dialogue with their riders? Right now, it seems like they’ve passed the point of no return.